Debt Management
Use these steps to prepare an estimated budget to determine your discretionary income after you leave school or to help you decide how much you can afford to borrow while you are in school.
- Identify your income.
- Include your anticipated take-home pay for your chosen career or major.
- Visit sites such as www.salary.com to research salary information.
- Calculate your expenses.
- Include your anticipated monthly student loan payments as well as rent/mortgage, groceries, utilities, transportation, medical, and personal expenses.
- Once you have borrowed a student loan, use the National Student Loan Data System (NSLDS) to access your student loan account and determine your total debt. You may also get the information by calling (800) 4-FED-AID.
- Use the loan calculator to estimate your monthly student loan payments based on the amount you borrow or expect to borrow.
- Calculate your discretionary income.
- Subtract your expenses from your income.
- For successful budget planning, you should have some discretionary income.
8 percent rule
Most financial advisors recommend student loan payments not exceed 8% of your monthly gross income. Multiply your estimated gross income (before taxes and other withholdings) by .08. Your student loan payments should not exceed this amount.
QUICK TIP: Borrow only the amount you need.
If you determine that you need additional funds later, talk with your school?s
financial aid office. |
